Medicare Looks Back Two Years. A Roth Conversion at 63 Lands on the Premium at 65. The Same Conversion at 62 Never Shows Up
A one-year difference in when you do a Roth conversion can determine whether Medicare ever sees that income at all, and the cutoff has nothing to do with how much you convert.
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A Roth conversion done at age 62 and the same conversion done at age 63 can land in very different places on a Medicare statement. The earlier one never touches a premium. The later one can add a monthly surcharge to the first year of coverage at 65. What separates the two is a two-year lag between the tax year used to determine the income-related Medicare premium surcharge and the year the surcharge is applied. Income for a given tax year sets premiums two years later. A conversion at 62 shows up on the return that would set premiums at 64, before Medicare has begun. A conversion at 63 shows up on the return that sets premiums at 65, the year enrollment starts.
How the Surcharge Actually Works
Medicare premiums vary with income, and above certain thresholds, an income-related monthly adjustment is added to the standard premium. According to CMS, the standard monthly Part B premium in 2026 is $202.90, up from $185.00 in 2025, and the surcharge affects roughly 8% of people with Medicare Part B. It applies to both the medical coverage premium and the prescription drug premium, so a single high-income year raises the cost in two places at once.
The structure works in steps. CMS’s 2026 table shows the first step attaches when individual modified adjusted gross income crosses $109,000 (or $218,000 for joint filers), adding $81.20 to the monthly Part B premium. Each higher bracket lifts the surcharge further, with the top tier at individual income of $500,000 or more ($750,000 joint) reaching a $487.00 monthly adjustment. Because the brackets are cliffs, one dollar over a threshold triggers the full higher surcharge for the entire year.
The surcharge is reassessed annually, so a single high-income year produces one year of higher premiums, and if income returns to normal, the surcharge falls away.
Why the Pre-Enrollment Years Are Different
For people who retire before 65, income often drops sharply once the paycheck stops and before Social Security and required distributions begin. Those low-income years are already the natural home for conversions. The two-year lookback adds a second reason to use the earlier of the two. A conversion done in a tax year that falls before Medicare enrollment cannot attach to a Medicare premium, because there is no premium yet for it to attach to. That window is narrow and time-limited.
Complication After 65
The lookback does not end once coverage begins. Every conversion done from 63 onward eventually lands on a premium year. A surcharge in a given year is rarely a reason to abandon a conversion. Tax saved by moving money out of a traditional balance over a long retirement can exceed a bounded one-year premium increase, particularly when the alternative is larger required distributions later. IRMAA is one of several Medicare costs that quietly reshape a retirement budget, and we mapped the full set of surcharges and coverage gaps in a free guide here. Which years absorb the surcharge, and whether the trade is worth making in each of them, is what determines the outcome.
Part B premiums are withheld from the Social Security check, so the cost hits retirement income directly. With the 2027 Social Security COLA tracking toward 3.1% based on early third-quarter data, a bracket jump can consume much of an inflation raise for the year it applies.
Practical Handling
Before converting, a person can identify which tax year sets which premium year. The mapping is mechanical and knowable in advance. When a conversion lands on a coverage year, sizing it against the next bracket line matters more than picking a round dollar amount, because crossing a threshold costs in one step rather than gradually. When a genuine income drop has already occurred, such as retirement, Medicare lets a beneficiary request that the surcharge be reconsidered rather than waiting the full two years for the return to catch up. The surcharge is also assessed per person, so in a couple where both are enrolled, one joint return can lift both premiums at once.
Ultimately, the big takeaway here is that the two-year lag is mechanical and predictable. Mapping conversion years to premium years in advance lets you size or avoid the surcharge, and this can only be a good thing for most people.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
